In  the first six months of 2003 JSC "Latvijas balzams" sales amount to

LVL  22.8  million  or 47% of the target for the year.  Net profit made

during  the  period amounts to LVL 214 thousand (target for the year is

LVL 2.016 million).



During  the first half of 2003 the Company finalised the implementation

of  two  large  investment  projects - storage facilities and packaging

production  unit.  This will allow providing large volume export orders

with full service, including storage, customs procedures and reloading.

Phase  I  of  another investment project, reconstruction of low alcohol

production  unit,  was completed, too, allowing launching a new product

category  - beer mix. All in all, LVL 4.8 million have been invested in

the  projects since autumn of last year. The new projects involve extra

costs  as  well - due to new jobs and administrative costs. The company

believes that a long-term investment has been made, which should not be

expected   to  bring  immediate  profit.  The  accomplished  investment

projects  guarantee  that  the  company  will  be  able  to  handle the

increasing export orders.



JSC  "Latvijas  balzams"  has set for itself the key task for 2003 - to

consolidate  the position in the domestic market, increasing the market

share to 48% by the end of the year. In the first 6 months more than 20

new products were offered to the market.



The  company  continues  to  work  on  contract  manufacturing of other

brands.  Marketing  activities  in  Lithuania  and  Estonia  have  been

intensified;  the  company  has opened new markets and is expanding the

present  export  volumes and range of products to the Ukraine, Denmark,

Byelorussia,  Estonia,  Austria,  Sweden.  All in all, the exports have

increased by 24% in comparison with the respective period a year ago.



Total  investment volume planned for 2003 amounts to LVL 4.454 million.

It  includes  completing  the  reconstruction  of  the  production unit

located  at  Briana Street, Riga. The company proceeds with the work at

introducing quality control, labelling, packaging and tasting standards

that  would  meet  the most stringent EU directives and regulations. By

the end of the year "Latvijas Balzams" intends to attain an increase of

export  sales  by 30% over the last year's figure. Initial preparations

have been done to enter a number of new export markets: Czech Republic,

Slovenia, United Kingdom, Norway, Mexico and Japan.



To  strengthen its position in the Baltic region, "Latvijas Balzams" is

participating  in  privatisation  of "Stumbras", a Lithuanian alcoholic

beverages producer. The ultimate results of the tender bid have not yet

been announced.